Yesterday the Fed decided to keep the rates on hold, but did not completely ruled out a possible rate hike this year. The Fed justification was based mainly on improvement in the labor data that is still not strong enough to raise the rates this month. The statement was dovish to midly hawkish with the emphasis on economic data from the US. This means the market will be quite sensitive to any economic news from the US that will come during the next three months. Nevertheless, there is a clear positive attitude in the Fed to raise the rates this year for the first time since 2006 if the data from labor market and inflationary pressure will improve enough. Any softening in the data (NFP number below 200 000, inflation below 1%) will make the Fed wait even longer to the December before making any decisions.

The EUR/USD reaction for the Fed decision resulted in a fake breakout above the golden trendline and now the market is in a reversal mode. The 61% Fibo at the level of 1.0930 is the key daily support level and if it is broken, the lows at the level of 1.0808 will be in view.